TMI Blog2019 (11) TMI 580X X X X Extracts X X X X X X X X Extracts X X X X ..... ese facts and deleted the addition in absence of any material with respect to unaccounted expenditure or any on money received by the assessee on sale of flats. Further, the assessee supported the cost of construction with the registered valuers report. Therefore, there is no infirmity in the order of the ld CIT(A). The judicial precedent relied upon are on different facts. It merely said that inspector of the Income Tax is not qualified to estimate the cost of immovable property. There is no quarrel on this issue. Thus, we do not find any infirmity in the order of the ld CIT(A) in deleting the above addition - ITA No. 1914/Del/2017 (Assessment Year: 2012-13) - - - Dated:- 16-10-2019 - SHRI SHUDHANSHU SRIVASTAVA, JUDICIAL MEMBER AND SHRI PRASHANT MAHARISHI, ACCOUNTANT MEMBER Revenue by: Ms. Ashima Neb, Sr. DR Assessee by: Shri Kapil Goel, Adv ORDER PER PRASHANT MAHARISHI, A. M. 1. This appeal is filed by the ld AO against the order of the ld CIT(A)-17, New Delhi dated 04.01.2017 for the Assessment Year 2012-13, wherein, the addition of ₹ 2,05,85,062/- on account of unexplain ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... responsible for any consequences as a result of this new construction. 4. That after demolishing the existing building by the first party, the Developer/Builder/Second Party shall construct the building comprising of basement Ground Floor, First Floor, and Third Floor as per specification detailed in the annexure attached hereto And the old material/malba shall be on account of the Second Party. 5. That all the rates and taxes due and payable up to the date of this agreement executed between the parties in respect of the said Properly hereby agreed to be developed by the Developer/Builder/Second Party shall be excusive liability of the First Party/Owner. Thereafter the liability in this behalf shall devolve exclusively on the parties or there nominee(s) in respect of their respective portions proportionately and house tax shall also be paid separately according to the respective portions by them. 6. That as mentioned above, the project shall consist of Basement, Ground Floor, First Floor, Second Floor and Third Floor. The parties hereto have agreed to divide the portions separately in the following manner: i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d as the sales in the profit and loss account and against the sale total cost of construction/development of 5 floors is treated as purchases. The difference amount is the profit/income from the collaboration agreement. On perusal of the profit and loss account, it is noticed that the assessee has shown the sale price of the flat as ₹ 40,00,000/- and purchases against the sale is shown as ₹ 34,27,813/-. Since the data provided relating to cost and sale was a catatonic figure therefore the assessee was asked to show-cause vide this office letter dated 16/03/2015 why the total sales consideration of the flat (Second Floor) will not be treated as five times of the consideration on the basis of market value and profit from the collaboration agreement be calculated accordingly. In response, the assessee vide his submission dated 20/03/2015 stated that: Sir I would like to provide you with the details of the construction, Sale Deed and collaboration Agreement. Till today also the sale value of the similar flat is not 2 times also, so how can it be treated 5 times. Also we have provided the details of the amount paid to the contractors an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 9/02/2015 shows that the payment to Sh. Deepak Gupta alleged contractor of the collaboration was made for an amount of ₹ 5,50,050/-. However, ledger account of Sh. Deepak Gupta shows he has received an amount of ₹ 8,00,000/- more apart from the mentioned amount of ₹ 5,50,050/-. In the case of Janta Steel, ledger account submitted on 09/02/2015 shows that payment of ₹ 1,03,125/- whereas the purchase details submitted alongwith the show-cause notice reply on 20/03/2015 represent a different figure of ₹ 3,00,000/-. Other payment of ₹ 3,00,000/- as alleged to be made to Kalru Marbels as per purchase ledger submitted on 09/02/2015 was changed to ₹ 1,03,125/- on the submission dated 20/03/2015. Considering the above and taking into consideration, the most conservative price of construction i.e.₹ 1500/-sa.ft. The total cost of the construction becomes 1,15,12,875/- (7675.25 X 1500). As the amount of ₹ 13.50 lakhs paid to the landlord as additional amount apart from the cost of construction is also included in the abovementioned amount of ₹ 1,15,12,875/-, therefore, the per sq.ft. rate will get reduced by approx. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 062/- and market price of flats of ₹ 1,25,00,000/- respectively. It was submitted that he had clarified with reference to contemporaneous sale instances and registered valuer report, that there is no suppression of the expenditure on construction of flats, also there is no suppression of sale price of flats. Here no incriminating material worth name has been brought on record by AO to justify the wild allegations made on basis of assumptions and presumptions. (Reference can be made to point no. 4 of letter dated 20/03/2015 filed to AO, paperbook pages 6 and 7). Two parts of captioned addition relates to: i) Unexplained expenditure u/s 69C ₹ 80,85,062/- ii) Macket price of flats ₹ 125,00,000 Taking first part of addition, it is firstly stated that section 69C which is applied to assessee's case is absolutely not applicable to present facts. Said provision at the outset requires concrete evidence of actual expense by assessee which cannot be replaced and substituted by probabilities and estimates. On this short count, for failure to lead evidence of actual expenditure being in excess of reco ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... c of alleged extra receipts from sale of flat is purely based on vague estimates by Ld AO and is beyond comprehension. After again and again searching for reason of said addition, we have not been able to find any ground to proffer our comments on the same. Still for sake of completing this submission, it is by now well settled that any charge of on money requires specific solid evidences based on enquiry and examination where in present case neither there is any evidence to support AO's allegations nor there is any enquiry or examination done by him to support his allegations from relevant parties. There is no sale which is unaccounted. Merely substituting the notional market price cannot serve the purpose of law. It only remains for us to refer to the observations of the assessing officer to the effect that no one makes a loss in real estate business and that the market perceptions indicate that the prices of the immoveable properties are always on the upward trend. These observations have, inter alia, formed the basis of the additions made by the assessing officer. It was even suggested before us on behalf of the revenue that it is a notorious practice prevailing in real ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that the payment was made towards tuition fee which is allowable as deduction under chapter VIA of the IT Act. In this regard, he has filed evidence also. The AO is directed to verify the same and effect of the same be given accordingly. 4. Therefore, the ld AO aggrieved with the order of the ld CIT(A), is in appeal before us. 5. The ld DR extensively read the reasons given by the ld AO for making the addition and submitted that there is wide variation between the sale price of the flat shown by the assessee and what is prevalent in the market. She further stated that the ld AO has made the above addition after making proper enquiry about the market price of the flat in that area as well as report of the Inspector. She submitted that the ld CIT(A) has deleted the addition without considering the reasons given by the ld AO. 6. The ld AR vehemently supported the order of the ld CIT(A) and submitted that addition has been made by the ld AO without any evidence of incurring of any expenditure. He further relied upon the decision of the coordinate bench in ITA No. 2106/Del/2011 for Assessment Year 2002-03, wherein, identical addition was ..... X X X X Extracts X X X X X X X X Extracts X X X X
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